Is It Dead?
Jan 21st
Wow! What a Bloody day on Wall Street for the Bulls! I was wrong yesterday in thinking that Goldman would hold up the market today, and that we would sell off to 1115 on Friday. I hope that many of you were already short and profited from it even though it came a day early. I know I’m a happy camper, as I was already short!
Today’s volume was one of the largest I’ve seen in many months, with 338 Million Shares Traded on the SPY. Big Volume = Big Down Day! This is going to be an exciting year… if you’re a Bear that is?
Looking at tomorrow, we have some good support a 111.40, and 111.20 SPY. If we gap down, I’d expect those levels to hold, and the rest of the day should float higher… although not a whole lot higher. No major news or earnings are being reported tomorrow, so that sets up a “Pause” day… (flat to slightly up).
Moving on…
Isn’t it interesting how Scott Brown, a Republican, wins the Senate seat, and suddenly Obama decides to come out on TV and state how he’s now going to be tough on the Banks? Coincidence? I think not… He did it because he’s now worried about his popularity… which is now shrinking! He has too act tough on the banks so people won’t switch over to the Republic side when more elections come up.
He already lost a key Democratic seat when Ted Kennedy died, and was replaced with a Republican. Now his health care bill (which is garbage by the way) is in jeopardy of not going through. Then there is the economy, and this fake wall street rally… which isn’t working or creating any new jobs! Duh Obama! I could have told you that!
Let’s not forget about Ben Bernanke, as the Senate has yet to re-appoint him. I think they won’t, and that will be another “lack of confidence” of a recovering economy. Which will probably start another sell off in the market? So, looking forward (and I’ll do more a in-depth post this weekend), I’m expecting a few days of a flat to slightly up market until Obama has his “State of the Union” speech next Wednesday.
If you are still short, and didn’t close out today, I’d close them out tomorrow on any gap down and stay in cash over the weekend. That’s what I’m doing, as any move up next week will be limited and not worth risking… in my humble opinion at least.
Red
Still In The Rising Wedge…
Jan 20th
Unbelievable! The PPT (Government) managed to rally the market back up to close just inside the rising wedge once again. But, time is running out quickly and tomorrow should be the last day in the wedge. I think that Goldman will release good earnings and that will keep the market from falling outside the wedge. A flat to slightly up day is what I expect.
However, I expect selling on Friday and a possible drop to 1115 spx? Now it’s possible that tomorrow Goldman might not be able to hold the market inside the wedge all day, and we could sell off into the close? Regardless… the market is going down! It’s taking a little more time to fall then I expected when I wrote my weekend post, but we are basically still on track.
My biggest concern now is that the time line for the final top (not for the year, as I expect a summer rally) may come early? I had it projected out at February the 9th-10th, but because Obama is going to give the “State of the Union” address next Wednesday, on January 27th, I think we might not make it until February?
The loss of the Democratic seat in the senate to the Republican Scott Brown in Massachusetts could throw a monkey wrench in Obama’s Health Care Plan. Plus, the Senate only has until January 31st (a Sunday, so really only the 29th) to decide if they are going to reappoint Ben Bernanke. Make NO mistake about it… this market is controlled, and this news events are going to affect the market tremendously!
Since Obama originally stated that he would support another term for Bernanke, it’s not going to look good if the Senate doesn’t agree. I believe the main reason the market is still afloat right now is because of Obama’s Health Care Bill. If he gets that passed then he’ll let the market fall. He’s trying to fool the American public with this fake rally, so he can get what he wants.
But, I don’t think the death of Senator Ted Kennedy was something they were prepared for… and then losing the empty seat to a Republican! This changes the game plan for them seriously. We’ll just have too take it one day at a time for now, but keep in mind that the huge sell off I’m looking for… could start next week! Sorry for the change of plans, but I wasn’t sure how this election issue would affect the market… and I’m still not 100% sure? Only that things could be speeding up…
One more thing… if we do fall to 1115 by Friday, don’t short the market! I’m certain that the PPT will be buying early Monday morning to prevent any serious support levels from being broken. They are going to keep this market up until after Obama speaks (at least that long).
Red
The Bulls Never Quit…
Jan 19th
Looks like we got our back test… only a little higher then I expected. Regardless, I don’t see it going higher tomorrow, as there are too many earnings reports coming out that should force it down. But, here’s the problem… we are still inside this rising wedge, and coming very close to the end.
Part of my forecast over the weekend is based on a breakdown of the trend line to about 1115 SPX, and then a final push higher to 1160-1180 for the back test, which would reach the conclusion of an elliottwave pattern up. Different chartists have different levels, but they all complete somewhere in that 1160-1180 range. The Bulls want this area badly, and they might not drop out of this rising wedge until they get it?
If the market doesn’t fall to 1115, over the next few days, then I’m going to have to move the time line up from February 9th-10th, to January 27th-29th. It’s all about reaching the finally top… wherever that is? Could 1160 or 1180, or somewhere in between? But, once it is reached, the sell off will start.
So, if we breakdown out of the wedge before reaching the 1160-1180 level, then I’d expect a back test to occur, which should push us into the February 9th-10th turn date. If we stay in this wedge until we hit that target level, then I believe we’ll turn down early. We’ll see…
Red
Weekend Update…
Jan 17th
This weekend update is going to be a “KEEPER”, as you should bookmark it and re-read it in about a month from now. Also, you should save the charts posted here. I’m going out a limb here by posting a “Turn Date” and stating how much I expect it to fall, but I’ve never been afraid to speak up when I have something important to say… so why stop now? The chart below states what I’m expecting to happen over the next few weeks. Study it hard!
I’m expecting a flat to slightly up day on Tuesday (Market’s closed on Monday for Holiday). I’d say the intraday high could be around 114.00 SPY level. The market could close up or just flat on Tuesday, but after the close and throughout the rest of the week, there is a lot of important earnings out.
Tuesday
Before Market Open: C, PETS, AMTD
After Market Close: CREE, IBM
Wednesday (my b-day =)
BMO: USB, MS, WFC
AMC: EBAY, SBUX
Thursday
BMO: GS, UNH
AMC: AXP, COF, GOOG,
Friday
BMO: GE, MCD
I expect the market to view the numbers as bad, and sell off into the end of the week. The first target down is at 112.30 SPY, which is the horizontal support line at about 1115 SPX level. This is where the market should bounce. After that, there is the 50 day moving average coming in around 111.00 (daily chart), and a gap fill at 111.40 SPY (60 minute chart) that should provide good support for the down move coming. That’s about 1103 SPX for the gap fill (60 minute chart).
The chart above shows a possible 5 wave down move to about 1100 spx would be a good place to stop the move down, as it would fill the gap on the 21st and be an important even number that the Bulls won’t give up easy. It may not make it down that low, and instead stop at the 1115 area? I personally think that 1115 will stop the fall as 50 day moving average on the daily chart (not shown on the chart above) hasn’t been hit since November the 1st, 2009. Anytime the market has been away from a major trend line for that long, it should produce a multi-day bounce. So, this chart shows a possible move down further, but I don’t really think it will happen. From an Elliottwave point of view… the move shown is a 5 wave move down. I think it will only be an ABC wave pattern. Again, the big move down is coming February 9th-10th, 2010. Don’t get sucked into a bear trap too early.
Moving on to a longer term I’ve posted another chart below that shows you where I’m expecting the market to go this year. I believe the move from the March 6th, 2009 low of 666 to the final high of 1250-1300 will end the Primary Wave 2 Bear Market Rally with a 5 wave pattern completing it. It’s hard to say when the exact high will occur, or how high it will go… but the down move has already been planned for mid-September.
Yes folks… the market is rigged! Believe it, or not? The move down in September will only be Wave 1 inside Primary Wave 3… but it will be violent! It should be a couple hundred points, and then a Wave 2 up into the first of 2011 will happen, and finally… the BIG ONE! Wave 3 of Primary Wave 3! That one will take out the March 6th, 2009 low and head America into the Great Depression 2!
I really don’t want it too happen as it will be horrible for the America people, but I can’t stop it. So, I will continue to try and inform as many of you as possible, and hopefully you can profit from it enough to help out those less fortunate. This is a special post and hopefully it will give you some help in planning your trading, not get caught long in February.
Of course I could be wrong, and if I am I’ll gladly admit it… and not hide behind a lot of double talk like some people do. I’m clearly stating that I expect the market to go down next week, then up until February 9th-10th. Then a large move down that will either go 97 points down, or down to 1047 SPX? Which one… I don’t know? It doesn’t matter right now, as the most important thing is to get yourself positioned short before it starts.
I’ll jump off that ship before it sinks, and on to the next ride up when I’m finally on it…
Red
Market Dumps On Heavy Volume…
Jan 15th
Finally, a decent sell off! The market sold hard today with 212 million shares traded on the SPY. Remember how many times I’ve stated that heavy volume means a DOWN market, and light volume means that the market can be easily controlled and pushed up higher.
This is the start of nice down trend that should last though all of next week. I’ll do more on my weekend post, but briefly… I’m expecting a pause to slightly up day on Monday to occur. The market usually doesn’t have huge back to back down days, so a flat day is too be expected. There will be a time in the future that the market will sell off huge many days in a row. Not yet though…
Be patience… the big sell off is coming in the first week of February! I’m expecting about a 100 point sell off in the S&P500 to occur, in a very short time frame… a week or two probably? Save up your cash for this to happen. I’ll have more information as it draws closer.
I’ll also have my usual weekend post up by late Sunday night.
Enjoy the weekend,
Red
